Active housing inventory fell 5,383 last week and new listing data is still trending at all-time lows in 2023.
The seasonal housing inventory bottom evaded us again last week as active listings fell and new listing inventory decreased. Purchase application data rose again, with more positive than negative data in 2023. Mortgage rates didn’t move much last week, but the 10-year yield rose even though inflation data was tamer than expected, and we had a weaker retail sales report number.
In 2007, when sales were down big, total active listings peaked at over 4 million.
Today, even though sales are trending at 2007 levels, we are at 980,000 total active listings, per the last existing home sales. We are getting the next existing home sales report this week; just remember this inventory data is considerably lagging and also includes homes that are pending. People often ask me why there is such a difference between the NAR data versus the Altos Research inventory data. This link explains the difference and is worth a read. The 10-year yield and mortgage rates Last week, mortgage rates didn’t move much; even with the two inflation reports and weaker retail sales data, rates ended up pretty much flat. In my 2023 forecast, I said that if the economy stays firm, the 10-year yield range should be between 3.21% and 4.25%, equating to 5.75% to 7.25% mortgage rates. If the economy gets weaker and we see a noticeable rise in jobless claims, the 10-year yield should go as low as 2.73%, translating to 5.25% mortgage rates. As you can see in the chart below, we have stayed in the firm economic 10-year yield range 100% of the time. We can also see how hard it’s been for the 10-year yield to break below the 3.37%-3.42% area with any conviction. The labor market, while getting somewhat softer recently, hasn’t broken this year, so even with all the drama we’ve seen in 2023, the bond market channel has held within its proper channel, meaning mortgage rates should stay in the range between 5.75%-7.25%. The banking crisis is an entirely new variable this year as short-term rates, such as the 2-year yield, have simply collapsed, assuming the Federal Reserve is going to have to cut rates faster that it wants. Even though the market stress has decreased lately, the assumption is that credit will only get tighter as the year grows. The Fed believes the banks getting tighter with their lending is like having three to four rate hikes, which means the economy will feel this stress and the Fed has to do less work. The Fed will welcome credit getting tighter as this means their forecasted recession might finally happen. In the most recent Fed minutes, they have even used the R-word, saying it might happen later this year due to credit getting tighter. I am keeping an eye on jobless claims because I believe the Fed will pivot their language on the economy once jobless claims get above 323,000 on the four-week moving average. However, we are still far from those levels, even though it has been rising recently. Last week initial jobless claims increased by 11,000, and the four-week moving average also rose to 240,000. Purchase application data Purchase application data has been one of the most improved housing market data lines since Nov. 9, 2022. This is one big factor for why total housing inventory hasn’t found a bottom yet, as demand has stabilized from its waterfall dive in 2022. This also explains why the most recent existing home sales report had one of the most significant month-to-month sales prints ever.Given that rise, we should expect a month-to-month decline on the next one.
We have had three consecutive rising pending home sales reports as well. Purchase application data rose 8% weekly in the last report, which means five out of the last six weekly prints are positive, and we are getting closer to the seasonal end of this data line. I traditionally put the most weight on this index between the last two weeks of January through the first week of May. After May, volumes traditionally fall. Year over year, purchase applications declined 31%, the lowest since September 2022. However, context is critical for the rest of the year. Because the year-over-year comps will get easier as the year moves on, especially in the second half of the year, we need to focus on the weekly data more. This wouldn’t be an issue in regular times, but post COVID-19, we have extreme year-over-year data that needs context. However, with that said, 2023 year-to-date data has had eight positive prints versus five negative prints, so the data has stabilized in 2023. This is much different than the V-shaped recovery we saw during COVID-19. The week ahead has tons of housing data. This week will be full of housing data. We have the S&P CoreLogic Case-Shiller home price index, which is lagging compared to the current data that Altos Research shows, the FHFA house price index, the builder’s confidence report, housing starts and existing home sales. The housing recession is ongoing because housing permits haven’t been rising; we will get fresh data on this topic this week. One thing I will be keeping an eye on is whether we see more housing completion growth, because the best way to deal with rental inflation is getting more and more of those apartments up. With rental inflation already cooling off in real time and more apartments coming online, that is the best 1-2 punch to push CPI inflation lower over the next year, as I discuss here. The housing market tracker is designed to give an outlook for the future, and as I have written, the housing market dynamics changed starting Nov. 9. However, when mortgage rates rise to 7% and more, we have seen the weekly data get hit, impacting the sales data going out. However, housing data has generally stabilized and we still haven’t found the seasonal bottom in inventory. New listings have been trending at all-time lows, which is what the tracker data has been telling us for some time now. Related: Mortgage rates have gone wild, so what’s next for housing? September 27, 2026 In “Housing Market” Housing year-over-year comps need context for the rest of 2026 September 5, 2026 In “Housing Market” Housing market faces headwinds as mortgage rates move above 7% September 12, 2026 In “Housing Market”
